U.S. Bankruptcy Court Judge Jerry Brown approved the basic plan Wednesday for selling the stock in ailing Central Progressive Bank, but pushed back the proposed date for the auction until later in November to encourage more bidders to participate. The deadline to submit bids is now Nov. 28, and the auction is set for Nov. 29.

Central Progressive's parent company, Blossman Bancshares Inc., filed for chapter 11 bankruptcy reorganization last week so that it could sell its stock in the Lacombe bank to another party that could recapitalize the bank. Presumably, that would be First NBC Bank Holding Co, which struck a deal with Blossman Bancshares in September to buy Central Progressive's stock, but any sale is actually supposed to be the result of an auction.

Blossman Bancshares pushed for an aggressive time frame for the sale, proposing that rival bids be submitted on November 11 in advance of an auction Nov. 14, arguing that time was critical because the bank was in fragile condition.

Central Progressive remains open for business and deposits are backed by the Federal Deposit Insurance Corp.

But a creditor, Alesco Preferred Funding XIV Ltd., the holder of trust securities created in an effort to raise capital in 2006, objected to the speedy disposition of the bank and proposals for how the auction would be conducted. Alesco said in a filing that after trying to sell the bank for years, Blossman Bancshares was suddenly pushing an "overly rushed" sale process that "does not provide for a meaningful auction, but rather...an illusory auction process."

Alesco questioned whether First NBC's proposed purchase price of $900,000 was too low and unfair to creditors, and said that it was impossible to tell whether Blossman had done all it could to sell the bank before making the deal with First NBC. It also said there were too many facets of the deal designed to protect First NBC and ensure that it would be the sole bidder.

It also questioned why Blossman waited a month after striking the deal with First NBC to file bankruptcy, since that puts more time pressure on the deal and makes it more difficult for others to participate.

"The motion fails to contain any explanation of why the Debtor waited to file this bankruptcy case for over four weeks after the Debtor executed the Agreement with the Initial Bidder on Sept. 27,2011. This unexplained delay appears to have exacerbated the alleged exigent circumstances that the Debtor argues support proceeding at break-neck pace," Alesco wrote. "As proposed, the Auction procedures tilt the balance too far in favor of the Initial Bidder to the detriment of the Debtor's estate and creditors."

Alesco further noted that the agreement calls for First NBC and some of the Blossman Bancshares shareholders to be indemnified against liability, but it doesn't specify who is protected against what types of claims.

Former Central Progressive chief executive Richard S. "Dickie" Blossman has been sanctioned by the FDIC and banned from the banking business because of his reckless lending practices.

Before a hearing Wednesday afternoon on the proposed auction procedures, Blossman's bankruptcy attorney, Robin Cheatham, and Alesco's attorneys reached an agreement to extend the deadlines. They also agreed to certain procedures to market the deal and evaluate offers, lowered the minimum price for competing bids and capped how much money First NBC could recuperate in expenditures if it didn't ultimately win the bank.

During the hearing, Brown needled Blossman Bancshares and Central Progressive about the terms of the deal. "It's still a pretty short time," Brown said of extended deadlines.

He asked Cheatham to state for the record why such an urgent time table was necessary, and told Cheatham to make sure that Blossman cooperates with any prospective bidders and furnishes the same information that was given to First NBC, quickly. All the while, Brown groaned about the prospects of the auction, questioning "if somebody, by some miracle, qualifies by this auction date."

"The whole vetting process is set up so that FNBC either acquires the stock or gets paid back its expenses." Brown observed. "I think you all are kidding yourselves if you think it's set up to protect the resources of the estate."

But Brown ultimately said he'd grant the motion for the auction on the delayed timetable, provided that Cheatham makes the changes that were discussed at the hearing.

At least one other bank attended Wednesday's hearing, suggesting that there could be other bidders. The bank representatives declined to identify themselves.

Rebecca Mowbray can be reached at rmowbray@timespicayune.com or 504.826.3417.